Draconian measures to reduce mobile termination rates could have the effect of reducing capital expenditure and, therefore, limiting telecommunications access to the poor and those located in rural areas, says Zain Africa CEO Chris Gabriel.
Speaking this morning at the AfricaCom Conference and Exhibition, in Cape Town, Gabriel said he is aware there is a debate raging around mobile termination rates. Also known as interconnection, it relates to the prices mobile network operators charge each other to connect clients across different networks.
“One must be careful of adopting draconian measures as they often lead to a short-term gain, rather than a long-term solution,” Gabriel said in answer to a question from the audience.
He advocated a collaborative and educational approach between industry and regulators, where they seek to achieve common goals and objectives.
“I say, let's talk and find out what we want to achieve,” Gabriel said.
Controversial issue
Mobile termination rates have been a hot topic, especially in SA, which has recently conducted Parliamentary hearings into the issue. These rates have been blamed for the high cost of calls in the country, and intervention by regulator, the Independent Communications Authority of SA, has been fruitless.
Gabriel also warned against importing regulatory solutions from other countries to try to solve the problem.
“Some countries have looked to Europe for their answers. However, in Africa, markets are often a lot smaller, less developed and far less sophisticated and so different [regulatory] solutions are needed.”
During his presentation, Gabriel said the African cellular market is due for consolidation as more and more licences are being sold by governments, allowing further smaller operators in.
“Currently, they [the smaller operators] are buying their customers by reducing prices. Their objective is to get as many clients as possible in order to be sold to the larger operators. This is unsustainable.”
Collaboration is key
Gabriel also suggested network operators would have to collaborate with governments and regulators, and that they would have to explore facilities-sharing more.
He also criticised the tendency by many governments to tax as much as they can out of the mobile operators.
“Trying to generate as much revenue out of the industry is a short-term gain.”
Gabriel also denied that Zain Africa was up for sale, but did say it was a shareholder issue.
Questions from the audience related to recent speculation that the Kuwaiti telecoms operator would sell its African operations because it was not meeting its revenue targets.
“There are no plans to sell Zain Africa and we are committed to our markets and Africa,” Gabriel noted.
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